UK Career FAQ · 2026 Guide
How Much Redundancy Pay UK 2026/27?
What it means
UK statutory redundancy pay is your minimum entitlement when made redundant after 2+ years' continuous service. The amount depends on age, length of service, and weekly earnings (capped at £719). Above statutory, your employer may offer ex-gratia (extra) redundancy pay — common in larger redundancies and senior roles.
How it works
Calculation: each year of service × age band rate × weekly pay (capped at £719). Maximum is 20 years × 1.5 weeks × £719 = £21,570. The first £30,000 of total redundancy payment (statutory + ex-gratia + certain other compensation) is tax-free; above that taxed as normal salary income. National Insurance is not paid on the first £30,000.
What to do
Use our UK redundancy pay calculator to model your specific entitlement. Don't accept the first redundancy package — many UK redundancies have negotiation room, especially with ex-gratia payments. If offered a settlement agreement, take independent legal advice (usually employer-paid £500-£1,500). Negotiate beyond money: reference wording, outplacement support, restrictive covenants.
Common mistakes
Common UK redundancy pay mistakes: (1) Accepting first offer without negotiation. (2) Not realising £30k tax-free limit applies to total package, not just statutory. (3) Failing to take legal advice on settlement agreement. (4) Missing the weekly pay cap (£719) impact for higher earners. (5) Not negotiating non-cash items like reference wording.
Worked example
Steve, 45, has 12 years' service at £80,000 salary (£1,538/week, capped at £719 for redundancy purposes). Statutory calculation: 12 × 1.5 weeks × £719 = £12,942. His employer offers an enhanced package of 2x statutory + 3 months PILON: £25,884 + £20,000 = £45,884. Tax: first £30,000 tax-free (covers statutory + most ex-gratia); £15,884 taxed at 40% = £6,354. Net: £39,530. PILON taxed separately as normal salary.
Recruiter pro tip
Settlement agreements in UK redundancies often include 'ex-gratia' payments specifically structured to use the £30,000 tax-free allowance. If your employer offers settlement above £30,000, negotiate the structure to maximise tax efficiency — e.g., split between ex-gratia (tax-free up to £30k), PILON (taxed as salary), and pension contribution (potentially additional tax savings).
Related questions
Can I Negotiate UK Redundancy Pay 2026?
Yes. UK redundancy packages typically have negotiation room, especially the ex-gratia (above statutory) portio…
How Long Does UK Redundancy Take 2026?
Minimum 30 days for collective redundancies of 20-99 staff, 45 days for 100+. Individual redundancies typicall…
What is a UK Settlement Agreement 2026?
A UK settlement agreement (formerly compromise agreement) is a legally binding contract where you give up the …
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